The UK budget balance posted the biggest surplus for July since 2000, giving room for Chancellor of the Exchequer Philip Hammond to plan more spending ahead of ‘Brexit’.
Public sector net borrowing, excluding public sector banks, was in surplus by GBP 2.0 billion in July, the Office for National Statistics reported Tuesday.
This was the largest July surplus for 18 years and a GBP 1.0 billion greater surplus than in July 2017, also well above the expected level of GBP 1.1 billion.
The ONS said the key to the GBP 1 billion growth in surplus were a GBP 1.0 billion increase in self-assessed Income Tax receipts and a GBP 0.3 billion increase in the value-added-tax receipts.
In the current financial year-to-date period, the public sector borrowed only GBP 12.8 billion, which was GBP 8.5 billion less than in the same period of 2017. This was the lowest year-to-date net borrowing for 16 years.
The Office for Budget Responsibility expects a budget deficit of GBP 37.1 billion for the financial year ending March 2019.
If the reduction in borrowing is sustained, PSNB-ex would undershoot the OBR’s 2018/19 forecast by GBP 13 billion or so, Ruth Gregory, an economist at Capital Economics, said. Admittedly, an undershoot of this magnitude is unlikely, the economist observed.
Public sector net debt totaled GBP 1.77 trillion at the end of July, equivalent to 84.3 percent of the gross domestic product.